CFC: rural electric co-ops' own financial powerhouse

Rural Cooperatives, May-June, 2004

The National Rural Utilities Cooperative Finance Corporation (CFC) is a privately owned, non-governmental organization that provides low-cost capital and state-of-the-art financial products and services to its owners, the more than 1,000 electric cooperatives across the United States. CFC is the primary private market lender to rural electric systems, which serve more than 32 million end-users of electricity.

CFC's owners consist of electric cooperative distribution systems, power supply systems, statewide associations and service organizations. It serves as the sole source of financing for more than 200 electric cooperatives and supplements the credit programs of the USDA Rural Development's utilities programs.

CFC was launched in the mid-1960s, when the electric cooperative program began to seek alternative funding sources to supplement federal financing of cooperatives' growing capital needs. In 1967, the National Rural Electric Cooperative Association (NRECA) proposed the creation of a nonprofit financing institution that would be cooperatively owned by the electric cooperatives. NRECA members approved this plan, and on April 10, 1969, CFC was incorporated.

As a financial powerhouse with more than $21 billion in assets and some $34 billion in total credit commitments, CFC offers rural electric systems the financing they need to ensure a dependable source of energy for rural consumers.

Guided by a 22-member board of directors representing the managers and directors of its member cooperatives, CFC operates from its corporate headquarters in Herndon, Va., with more than 200 employees, 15 of whom are regional representatives located throughout the United States. By maintaining high credit standards and credit ratings, CFC provides its owners with competitively priced financing and investment opportunities through its role as a conduit to the worldwide private capital markets.

CFC manages several related organizations. Rural Telephone Finance Cooperative (RTFC) is a member-owned, nonprofit finance cooperative created in 1987 solely to serve the needs of the rural telecommunications industry. RTFC has carried out an essential role in rural telephone financing, providing needed funds for system upgrades, new technology, acquisitions, and an array of service enhancements.

National Cooperative Services Corporation (NCSC) is a privately funded, member-owned, taxable cooperative that began operations in 1981. NCSC provides electric cooperatives and their affiliates with specialized financing and related financial services. NCSC offers a loan program that provides financing to for-profit and nonprofit associates affiliated with CFC owners, generally for rural economic development initiatives.

CFC works closely with NRECA, the National Rural Telecommunications Cooperative, USDA Rural Development, Federated Rural Electric Insurance Exchange, and similar organizations to ensure that electric cooperatives have the tools they need to prosper in a changing marketplace.

Contact information: website: www.nrucfc.coop ; phone: (703) 709-6700; address: 2201 Cooperative Way, Herndon, Va., 20171. CEO: Sheldon Petersen.